Rental Property Depreciation Calculator
Depreciation is the deduction that makes rental real estate so tax-efficient. See what your property generates each year and what it's worth at your tax bracket.
Worth about $3,205 a year in federal tax at a 24% bracket, if the loss is usable.
| Depreciable basis (price + costs + improvements) | $459,000 |
| Less land (not depreciable) | −$91,800 |
| Building basis | $367,200 |
| First-year deduction (mid-month convention) | $12,796 |
| Full-year deduction, years 2–27 | $13,353 |
A cost segregation study could move part of the building basis into 5-, 7- and 15-year property eligible for 100% bonus depreciation, which would pull years of deductions into year one.
Residential rental property, straight-line over 27.5 years with the mid-month convention (IRC §168). Losses may be limited by the passive activity rules unless you qualify as a real estate professional or meet the short-term rental exception. Depreciation is recaptured at up to 25% on sale. Educational estimate, not tax advice.
What the calculator does.
- Adds the purchase price, capitalized closing costs and pre-rental improvements to find your basis.
- Removes the land share, which isn't depreciable, and depreciates the building over 27.5 years.
- Applies the mid-month convention in the first year based on the month the property was placed in service.
Common questions
How do I estimate the land value?
Your county property tax assessment usually splits value between land and improvements. Apply that same ratio to your purchase price.
Can I deduct more than this in year one?
Often, yes. A cost segregation study can reclassify parts of the property into shorter lives that qualify for 100% bonus depreciation.
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